DOW – 362 = 26,076
SPX – 31 = 2822
NAS – 64 = 7402
RUT – 15 =1582
10 Y + .03 = 2.73%
OIL – 1.18 = 64.38
GOLD – 1.80 = 1339.10
It was just ugly. At one point, the Dow was down 411 points. Remember the Dow dropped 177 points yesterday. The slide marked stocks’ weakest two-day performance in at least six months. The administration has just passed a deficit-funded tax cut and is looking to deregulate the financial sector. They’re piling that atop a system that’s awash in liquidity. There is a chance that this kind of stuff might be a bit inflationary. At least that is the thinking in the bond market. Yield on the 10-year Treasury note has jumped to 2.73%; that’s a 30-basis point swing from the start of the year. Higher rates raise borrowing costs for companies, which is why investors in stocks get concerned. They also make stocks, a riskier investment, seem less attractive to bonds. So, is this the start of a crash? It is too soon to tell, but for some time now any dip in the market has been seen as a buying opportunity. We will see what happens in the coming sessions, but it should serve as a reminder that the market, when it does fall, it falls fast and hard.

And political uncertainty – did we mention that? Tonight, is the State of the Uniom Address. I’m sure that will clear up everything for everybody. With no infrastructure plan, no border wall, and no immigration bill, Trump didn’t make much headway on most of the proposals he issued in his first address to Congress last year. So he’ll be outlining them again tonight. He will take credit for a tax plan that passed, and he’ll take credit for the stock market – except for the past 2 days.

Amazon, Berkshire Hathaway, and JP Morgan Chase will work together to change how health care is provided to their combined 1 million U.S. employees. The plan, while in early stages and focused solely on the three giants’ staff for now, seems almost certain to set its sights on disrupting the broader healthcare industry. The three companies said they plan to set up a new independent company “that is free from profit-making incentives and constraints.” The group announced the news in the very early stages because it plans to hire a CEO and start partnering with other organizations. The effort would be focused internally first, and the companies would bring their data and bargaining power to bear on lowering health-care costs. Potential ways to bring down costs include providing more transparency over the prices for doctor visits and lab tests, as well as by enabling direct purchasing of some medical items. The initial focus of the new company will be on technology solutions that will provide U.S. employees and their families with simplified, high-quality and transparent health care at a reasonable cost. In the statement, JPMorgan CEO Jamie Dimon said the initiative could ultimately expand beyond the three companies.

Now, if this all sounds a bit vague, it is. We do not know many details. The Big 3 don’t seem to know many details. But when 3 guys have more wealth than half the country, they don’t have to have details. The as-yet-unnamed company will initially consist of Berkshire Hathaway investment officer Todd Combs, JPMorgan Chase managing director Marvelle Sullivan Berchtold, and Amazon senior vice president Beth Galetti. Other operational details including site for a headquarters and a long-term management team will be announced in the future. Each of the companies already has some interplay with the health care system. Amazon has been expected to make a move into health care, perhaps selling prescription drugs. Berkshire has among its companies, health care liability insurer MedPro Group. And the JPMorgan Chase Institute studies health care costs, finding in an October 2017 report that health care spending is expected to grow faster than gross domestic product through 2025. U.S. spending on health care rose from 13% of GDP in 2000 to 18% in 2015. Warren Buffett, in a statement, said: “The ballooning costs of health care act as a hungry tapeworm on the American economy. Our group does not come to this problem with answers. But we also do not accept it as inevitable.”

Even if they don’t have answers yet, the announcement carried some weight. Amazon has disrupted fashion, books, furniture, food, cloud-based storage services, and much else besides. It’s like the deflationary Death Star, destroying everything in its path. Now, it’s coming for one of the biggest, most complex industries in the US: healthcare. In the first couple of hours of trade today, the 10 largest health insurance and pharmacy stocks dropped by a combined $30 billion. UnitedHealth Group’s 4% share slide subtracted about 85 points from the Dow. CVS Health dropped 4%, Walgreens Boots down 5%. Anthem dropped 5%, Aetna down 4%, and Humana lost 3%.

MetLife headlined a series of disappointing earnings, and share lost 8.5%. Metlife said it was “strengthening” reserves, or setting aside more money to back policies for annuity and pension clients. MetLife’s review of the businesses has drawn a Securities and Exchange Commission inquiry and questions from state regulators including in New York. Years ago, Buffett called reserve strengthening the “ugly twin” of another piece of insurance jargon: loss development. He said executives use the terms to obscure their own mistakes.

Harley-Davidson shares tumbled 8% after the motorcycle maker posted a sales drop. Pfizer gave up early gains to trade 3% lower even as the pharmaceutical group posted stronger-than-expected earnings.Aetna fell nearly 3% after the insurer reported results. McDonald’s dropped 3% after reporting earnings that beat estimates. Corning shares fell 5.6% after earnings results.

The Department of Justice and the Securities and Exchange Commission have started investigating an Apple software update that slowed down older iPhones. Apple acknowledged late last year that an iPhone software update issued in February 2017 slowed down the processors on some older devices. The company said the update was designed to prevent unexpected shutdowns in devices with older batteries. The purported investigations by the DOJ and the SEC wouldn’t be the first pushes for more information from Apple. Groups in both the Senate and the House of Representatives have questioned Apple, and the company faces more than 45 class-action lawsuits from consumers.

The Conference Board said its consumer confidence index increased 2.3 points to a reading of 125.4 this month. But consumers were less upbeat in their assessment of current conditions. They were also ambivalent about their income prospects over the coming months, which the survey attributed to “some uncertainty regarding the impact of the tax plan.” The survey’s so-called labor market differential, derived from data about respondents who think jobs are hard to get and those who think jobs are plentiful, rose to a cycle high of 21.2 in January from 20.3 in December. Strong consumer confidence bodes well for consumer spending.

The S&P CoreLogic Case-Shiller composite index of house prices in 20 metropolitan areas rose 6.4 percent in November on a year-over-year basis after increasing 6.3 percent in October. For Phoenix, home prices dropped 0.1% for the period ending in November, but prices are still up 5.6% for the past 12 months. An acute shortage of homes on the market and strong demand are pushing up house prices. While rising house prices are boosting equity for homeowners, the tight inventory is sidelining first-time buyers from the market, hurting home sales. Home prices continue to rise three times faster than the rate of inflation.

The Treasury Department released a report last night listing a number of individuals closely affiliated with the Russian government. The department said it was not a sanctions list but many of the individuals were already subject to U.S. sanctions. There are 210 people on the list; almost all of whom are listed in Forbes’s 200 Richest Russians. It does not include Putin, who joked that he was “offended” he hadn’t made the cut. Meanwhile, the administration informed Congress it would not immediately impose additional sanctions on Russia under a new law designed to punish Moscow’s alleged meddling in the 2016 election. Trump opposed Russia legislation last year.

On the heels of big declines in digital currencies such as Bitcoin in recent weeks comes news that the U.S. Commodity Futures Trading Commission sent subpoenas to virtual currency venue Bitfinex, and Tether, a company that issues a widely traded coin that it claims is pegged to the dollar. The two companies share a CEO, and Tether has said all of its coins are backed by U.S. dollars held in reserve. Skeptics have questioned whether the money is really there. On Friday, Tokyo-based cryptocurrency exchange Coincheck said it was hacked and lost about $400 million in tokens. The U.S. Securities and Exchange Commission on Tuesday obtained a court order freezing the assets of a Texas-based initial coin offering that claimed to have raised more than $600 million. All this comes as federal judges in Brooklyn, New York, are about to rule on the question of whether the US can regulate cybercurrency offerings. In doing so, they could determine whether Bitcoin and other stateless currencies are securities that can be regulated like stocks or bonds.